2015 (12) TMI 644 - HC - VAT and Sales Tax

Waiver of pre deposit - Tribunal erred in granting stay against recovery till the disposal of appeal by the first appellate authority - Held that - Tribunal, it has considered the merits of the case and has found as a matter of fact that a strong prima facie case has been made out in favour of the assessee. It is in the light of the prima facie view expressed by the Tribunal viz., that its earlier decision in the case of M/s Vardan Petrochemical (P) Ltd. v. State of Gujarat would be applicable in the facts of the present case, that the Tribunal has thought it fit to restore the matter to the file of the Deputy Commissioner for the purpose of deciding the same on merits. - owers to direct payment of pre- deposit are discretionary powers and such discretion is required to be exercised by the concerned authority in a reasonable manner. Having regard to the finding recorded by the Tribunal whereby, it has recorded a prima facie view in favour of the assessee, it cannot be said that the discretion exercised by it in refusing the amount of pre-deposit is, in any manner, unreasonable, or arbitrary so as to give rise to any question of law. - Decided against Revenue.

Summary

Issues involved:
- Appeal under section 78 of the Gujarat Value Added Tax Act, 2003 challenging an order of the Gujarat Value Added Tax Tribunal granting stay against recovery.
- Dismissal of appeal by the Deputy Commissioner for non-deposit of 10% of the total demand.
- Tribunal's decision to set aside the Deputy Commissioner's order and send the matter back for reconsideration.
- Discretionary powers of the Tribunal in reducing the pre-deposit amount.
- Consideration of financial hardship in the context of waiver of pre-deposit.

Analysis:
1. The appellant, State of Gujarat, challenged the Tribunal's order granting stay against recovery until the appeal's disposal. The Tribunal set aside the Deputy Commissioner's order, directing the respondent to make a 10% pre-deposit of the total demand, leading to the appeal's dismissal. The Tribunal found a prima facie case in favor of the assessee, applying a previous decision, and sent the matter back for a fresh decision on merits by the Deputy Commissioner.

2. The appellant argued that the Tribunal decided the matter on merits by reducing the pre-deposit amount without establishing financial hardship. However, the respondent contended that the Tribunal's order was legal and just, citing that the Act does not require consideration of financial hardship for pre-deposit waiver. The Court examined both parties' submissions and the Tribunal's and first appellate authority's orders.

3. The central issue was whether the Tribunal's discretion in reducing the pre-deposit amount was justified. The Court noted that the Tribunal found a strong prima facie case in favor of the assessee, making the reduction reasonable. The Tribunal's exercise of discretion was deemed not unreasonable or arbitrary, given the circumstances and the prima facie view favoring the assessee.

4. Additionally, the Court clarified that the Act does not mandate considering financial hardship for pre-deposit waiver. As such, the Tribunal's decision did not suffer from any legal infirmity. Consequently, the Court dismissed the appeal, as it did not raise any substantial question of law warranting interference.

In conclusion, the Court upheld the Tribunal's decision to reduce the pre-deposit amount, emphasizing the discretionary nature of such powers and the absence of a requirement to consider financial hardship. The judgment highlighted the importance of reasonable exercise of discretion and affirmed the Tribunal's findings in favor of the assessee.